Article 63 of the Guarantee Law of People's Republic of China (PRC) stipulates that "the chattel pledge mentioned in this Law means that the debtor or a third party gives its chattel to the creditor for possession and takes it as the guarantee of creditor's rights. When the debtor fails to perform the debt, the creditor has the right to discount the debt or give priority to compensation with the price of auction or sale of the movable property in accordance with the provisions of this law. The debtor or the third party specified in the preceding paragraph is the pledger, the creditor is the pledgee and the transferred movable property is the pledge. "
Article 64 stipulates that "the pledgor and the pledgee shall conclude a pledge contract in writing. The pledge contract takes effect when the pledged property is handed over to the pledgee. "
In order to clarify whether money can be pledged, Article 85 of the Supreme People's Court's Interpretation on Several Issues Concerning the Application of the Guarantee Law of People's Republic of China (PRC) stipulates that "after the debtor or a third party designates its money in the form of special account, seal-up, deposit, etc., it will be transferred to the creditor for possession as a guarantee for the creditor's rights. When the debtor fails to perform the debt, the creditor can use the money to give priority to compensation. "
This provides a clear legal basis for margin pledge.
Extended data:
Loan deposits and other account funds can be used as pledges. But three conditions must be met:
First, the pledgor and the pledgee have agreed to use the account for pledge. The pledgor, whether it is the debtor or any other third party, agrees to repay the pledgee's creditor's rights with the funds in a specific account in priority when the debt cannot be paid off as scheduled, and this agreement must be made in writing;
Second, the funds in the account should be controlled and dominated by the pledgee, not the pledger. If only an account is set up, or only the creditor agrees with the debtor or a third party, but the funds in a specific margin account are not transferred to the pledgee, the funds in the margin account do not constitute a pledge, and the court can deduct them according to law to realize the execution of other cases.
Third, the loan deposit account needs to be "specific". This is a controversial issue and it is not easy to grasp in practice.
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